Hi and welcome to Just Answer!You do need to file all tax returns for years you would be considered a resident alien based on the green card - - you need to use form 1040 for your tax returnIn additional - because you are living abroad - you might be eligible for the foreign earned income exclusion.
For the person to qualify for the foreign earned income exclusion - he/she should: -- Work and reside outside the United States for at least 330 days during the year(Physical Presence test), or -- Meet either the Bona Fide test.If the person qualifies, he/she may exclude up to $92,900 (2011) in foreign wages. The amount of foreign earned income exclusion fro 2012 is $95,100.
Exclusion is not granted - to receive that exclusion - the taxpayer should file the tax return and attach the form 2555.
Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable - income from wages and self-employment. For instance - dividends, investment income, rental income, pensions, etc - are not excludable.If the same income is taxable abroad and in the US - you may claim a credit for taxes paid abroad - so the same income would not be taxed twice. Use the form 1116 - http://www.irs.gov/pub/irs-pdf/f1116.pdf please find instructions here - http://www.irs.gov/pub/irs-pdf/f1116.pdfThe credit is limited by the US tax liability on the same income - the form 1116 is used to calculate the amount of credit. Means - if tax liability abroad is higher - there will not be US taxes on that income, but if tax liability abroad is lower - in the US you will pay the difference after the credit will be applied.
So - it is possible that your US tax liability will not be as much if any.
Among the various new requirements contained in IRC 877 and 877A, individuals that renounced their US citizenship or terminated their long-term resident status for tax purposes after June 3, 2004 are required to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation. If all federal tax requirements have not been satisfied for the 5 years prior to expatriation, even if the individual does not meet the monetary thresholds in IRC 877 or 877A, the individual will be subject to the IRC 877 and 877A expatriation tax provisions.
$151,000 that mentioned on the form 8854 - means income tax liability - the amount of taxes paid - not taxable income.Let me know if you need any help.
If you choose the date of termination of your permanent resident status as Nov 2009 - and that date will be approved by immigration authorities - you would not be considered as having green card after that date - and as such will be treated as a nonresident alien for tax purposes.. As a nonresident alien - you would be taxed only on income from US sources (not on all your worldwide income as resident aliens).Thus - if that date would be accepted - your income from sources outside of the US would not be classified as taxable for US income tax purposes.